Titled appeal has been filed at the instance of the Revenue, calling in question the impugned order dated 29.7.2010 passed by the CIR(A), RTO., Faisalabad. The sole grievance of the Revenue is that the learned CIR(A) was not justified to annul the order passed u/s. 122(5A) of the Income Tax Ordinance, 2001. Besides, the Revenue has also filed a misc. Application whereby prayer was made for pressing following additional ground:- Commissioner Inland Revenue (Appeals) ,Faisalabad vide impugned order, has exceeded his authority by resorting to reviewing the order of his predecessor, the same being without lawful authority particularly when no mistake was flashing on the face of record."
2. Briefly stated the facts of the case are that return for the tax year 2008 was filed declaring net income of Rs. 59,806,114/-. The case was selected for audit u/s. 177(4) of the Income Tax Ordinance, 2001. During the audit proceedings the taxpayer filed a revised return declaring income at Rs.
61,200,000/- after excluding WWF. The revised return was found to be in accordance with law, therefore, the audit proceedings were dropped. The revised return was treated as an amended assessm ent order under Section 122(3). The said deemed assessment u/s. 120 of the Income Tax Ordinance, 2001 was considered to be erroneous and prejudicial to the interest of revenue hence, show-cause notice under Section 122(5A) of the Income Tax Ordinance, 2001 was issued. The reply in response thereto was discarded being untenable. For the reasons recorded in the body of assessm ent order, assessm ent was amended u/s. 122(5A) of Income Tax Ordinance, 2001 at total income of Rs. 67,863,111/- whereby donations amounting to Rs. 54,29,797/- were also added. Being aggrieved, the taxpayer approached the learned first appellate authority who vide an order dated 29.7.2010 annulled the order passed under Section 122(5A) of the Income Tax Ordinance, 2001, hence the instant appeal by the Revenue.
3. Both the parties have been heard and relevant orders perused. The learned D.R. Has vehemently argued the case and contended that the learned CIR(A) was not justified to annul the order passed u/s. 122(5A) of the Income Tax Ordinance, 2001 merely on the basis of wrong reference to the selection of deemed assessm ent order u/s. 120(1) instead of Section 122(3) of the Income Tax Ordinance, 2001. The learned A.R. On the other hand reiterated the same arguments as put forth before the learned first appellate authority. It was asserted at the bar that issuance of notice in the instant case is against the facts of the case and law. The return filed was selected for audit u/s. 177(4) of the Income Tax Ordinance, 2001 for the year under consideration by the Commissioner, Audit Division, RTO, Faisalabad vide letter dated 27.4.2009 which resulted in passing of an order u/s. 122(1 )/122(3) of the Ordinance. With regard to donations of Rs. 54,29,797/-, the same were treated as erroneous which is against the facts the of the case and law. It was argued that the amended order was passed on the basis of conjectures and surmises, therefore, the same was rightly annulled by the learned first appellate authority. Further argued that the Taxation Officer examined the payment of donations as well as necessary approval letters of donees, hence provisions of Section 122(5A) were not attracted in the present case and the learned CIR(A) has rightly annul the impugned order. To strengthen his case, reference was also made to the reported judgment cited as (2010) 102 Tax 554 (Trib) wherein it has been held:- "Since the department issued various notices under Section 122(5) on different grounds and kept on going for enquirers, the proceedings u/s. 122(5) were void as held in ITA No. 1210/LB/06, dated 26.7.2008 and 2008 PTD (Trib.) 1491. In both the cases, it is held that fishing inquiries are not allowed while exercising revisional jurisdiction and Section 122(5) in not maintainable if based on surmises and conjectures. In this case, the allegations levelled for invoking section 122(5A) were changed in the very second notice issued after more than four years of the original show-cause notice. In the second notice it was conveyed that Section 37 is applicable and cases cited for non-taxation of capital receipt are not relevant. In other words, the department admitted that amount is capital in nature, but taxable as capital gains. However, in the final adjudication order, the amount is taxed as "revenue" receipt chargeable under Section 18 of the Ordinance."
4. For the foregoing reasons and keeping in view the law cited supra, we are of the considered view that no indulgence is required in the impugned order which is hereby maintained.
5. Appeal of the Revenue as well as misc. Application being devoid of any force stands dismissed.